D101 Annual Declaration
D-101 General Income Tax Information
UpdatED Information for 2020
Income Tax
Income tax is levied on natural, legal and collective entities without legal personality, domiciled in Costa Rica, engaged in lucrative activities from Costa Rican sources.
Made Generator
It is the collection or accrual of rents in money or in kind, continuous or occasional, from lucrative activities, as well as any other income or benefit from Costa Rican sources not exempted by the Income Tax Act.
Tax 30s
All legally constituted natural and legal persons, irrespective of whether or not they carry out a lucrative activity, de facto companies, professional companies, State enterprises, collective entities without legal personality and the participation accounts in the country.
Income or Benefits
Income, income or profits are those generated in the national territory by the services provided, goods located or capital used, obtained during the fiscal period, as well as obtaining all capital income and capital gains or losses.
Those NOT affected by Income Taxation
a) Those intended for the particular use of the activity holder or his/her family members, such as those of recreation and recreation.
b) That they are not included in the accounts or official books or records of the activity that the taxpayer is obliged to carry, unless otherwise evidenced.
c) Assets representative of the participation in an entity's own funds and the transfer of capital to third parties, provided that the latter are public offerings, or issued by entities supervised by the bodies attached to the National Supervisory Board of the Financial System, or shares of investment funds, unless the taxpayer can prove an effective link with the lucrative activity through the procedure determined.
Affectation and disaffection of heritage elements
1 - Where assets of personal equity are affected by the lucrative activity, the acquisition value, updated at the date of the transaction, shall be taken.
2 - When goods or rights are disaffected from lucrative activity and passed on to personal estate, their value shall be taken in books or records at the date of operation.
3 - The involvement or disaffection of assets shall not constitute an alteration of assets, provided that the assets continue to be part of the person's assets.
Base Income Tax
The tax base is determined by subtracting from gross income the useful costs and expenses, necessary and relevant to produce the profit or benefit, duly supported by receipts and recorded in the accounting.
Where authorized costs, expenses or erogations are made to produce taxed or exempted income without regard, only the proportion corresponding to the taxed income shall be deducted.
Gross Income
Gross income consists of the sum of all income in cash or in kind obtained by the development of economic activity during the fiscal period.
Also, any increase in equity that does not have its justification in duly recorded and declared income, except for the repatriation of capital.
Expenses or Costs
These are all costs or expenses incurred by the taxpayer to carry out the economic activity.
These are all costs or expenses incurred by the taxpayer to carry out the economic activity.
The concepts of costs and expenses allowed by Taxation to be deductible from income tax as well as what are not allowed are set out in Articles 8 and 9 of the Income Tax Act.
Tax Period
The tax authorities may establish different periods, in general, where there is justification.
The tax period is one year, counted from the 1st. January to December 31 of each year, with the caveats set out in the Income Tax Act.
Examples
-
Legal persons, natural persons with lucrative and wage earning activity.
-
Natural persons with lucrative activity who simultaneously received income from wages, retirement or pension
Penalties for tax defaults
-
Summary of violations and the corresponding penalty
-
How and where I cancel sanctions
Examples of Income Tax Calcuations
Taxpayer Service Address.
UpdatED Information for 2020
Natural Person with Lucrative Activity (PFAL) vs Employee, Retiree or Pensioner
Where a natural person, in addition to receiving income from wage, retirement or pension concepts and engages in an independent economic activity (PFAL), he shall declare the amount exempted from those concepts (salary, retirement or pension) which he has enjoyed in the respective tax period.
View the following scenarios:
1.
A natural person, who as an employee, retiree or pensioner enjoyed an exempt amount higher than that of a natural person with lucrative activity (PFAL).
Consider the following:
FOR FISCAL PERIOD 2018
-
Monthly exempt amount for employees: ¢799,000.00 (according to bill)
-
Annual amount exempt for PFAL: 3,549,000.00 (according to law table).
The Employee, retiree or pensioner receives on a monthly basis the sum of ¢300,000.00 amount that by law for the fiscal period 2018, is exempt according to the respective table, therefore, the employer should not withheld the single income tax received on work (Wage Tax).
This person enjoyed in the tax period an exempt amount for twelve months of ¢3,600,000.00 (¢300,000.00 x 12).
In turn, this employee, retiree or pensioner, is a taxpayer as a natural person with lucrative activity (PFA) and must file the income tax return through Form D-101, where he declares his income less costs and expenses, thus obtaining the net income.
Example:
-
Gross revenue as of September 30, 2018 – ¢5,000,000.00.
-
Costs or expenses incurred during the fiscal period - 2,000,000.00.
-
Net income or income - 3,000,000.00 (-5,000,000.00-2,000,000.00).
If the rates of income tax for natural persons with lucrative activity fiscal period 2018 are:
Income Tranches
Rate
Up to ¢3,549,000.00
Exempt
On the excess of ¢3,549,000.00 to ¢5,299,000.00
10%
On the excess of ¢5,299,000.00 to ¢8,840,000.00
15%
On the excess of ¢8,840,000.00 to ¢17,716,000.00
20%
About the excess of ¢17,716,000.00
25%
And since as an employee, retiree or pensioner he enjoyed an accumulated annual amount greater than the exempt amount determined for a natural person with lucrative activity. The table above is "transformed" as follows:
Income Tranches
Rate
Up to ¢5,299,000.00
10%
On the excess of ¢5,299,000.00 to ¢8,840,000.00
15%
On the excess of ¢8,840,000.00 to ¢17,716,000.00
20%
About the excess of ¢17,716,000.00
25%
Therefore, for this example, we need to:
Net income earned as PFAL-3,000,000.00
Amount of the tax to be canceled for the period 2018 -300,000.00 (-3,000,000.00 x 10%)
Amount of the tax to be canceled for the period 2018 -300,000.00 (-3,000,000.00 x 10%)
2.
A natural person who, as an employee, retiree or pensioner, enjoyed only part of the amount exempt from that of the natural person with lucrative activity (PFAL)
You should consider the following scenario:
FOR FISCAL PERIOD 2018
-
Gross revenue as of September 30, 2018 – ¢5,000,000.00.
-
Annual exempt amount for PFAL: ¢3,549,000.00 (according to law table)
The employee, retired or pensioner, receives a monthly income of ¢200,000.00, is exempt according to the law table, therefore the employer does not give him withholding from the single income tax received on work (Salary Tax).
Exempt Amount Enjoyed: ¢2,400,000.00 (-200,000 X 12).
In turn, this employee, retiree or pensioner is a taxpayer as a natural person with lucrative activity (PFA) and must file the income tax return (Form D-101), where he declares all his income minus costs and expenses, thus obtaining the net income.
Example:
-
Gross revenue as of September 30, 2018 - ¢5,000,000.00
-
Costs or expenses incurred during the fiscal period - 2,000,000.00 Profit or net income - 3,000,000,00 (-5,000,000,00-2,000,000.00).
If the Income Tax Rates for natural persons with lucrative tax period 2018 are:
Income Tranches
Rate
Up to ¢3,549,000.00
Exempt
On the excess of ¢3,549,000.00 to ¢5,299,000.00
10%
On the excess of ¢5,299,000.00 to ¢8,840,000.00
15%
On the excess of ¢8,840,000.00 to ¢17,716,000.00
20%
About the excess of ¢17,716,000.00
25%
And being that as an employee, retiree or pensioner, he enjoyed an annual cumulative amount less than the exempt amount determined for a natural person with lucrative activity (PFAL), so he has a balance to enjoy exonerated that must considered for application. The table above is "transformed" as follows:
Income Tranches
Rate
Up to ¢1,149,000.00*
Exempt
On the excess of ¢1.149.000,00 to ¢5.299.000,00
10%
On the excess of ¢5,299,000.00 to ¢8,840,000.00
15%
On the excess of ¢8,840,000.00 to ¢17,716,000.00
20%
About the excess of ¢17,716,000.00
25%
Exempt stretch as PFAL .3,549,000.00
Amount enjoyed as an employee (¢2,400,000.00)
*Balance for enjoying exonerated ¢1,149,000.00
Therefore, for this example, we need to:
Net income earned as PFAL -3,000,000.00 less exempt amount as PFAL - 1,149,000.00
Calculation
-
Net income: ¢3,000,000.00 - ¢1,149,000.00 - ¢1,851,000.00
-
Amount subject to tax - 1,851,000.00
-
Cancel tax for the period 2018 - 185,100.00 ( .1,851,000.00 x 10%)
Quick Links
Core Services
Additional Services
Contact Info
Malaga Herradura, 73, Puntarenas, Garabito, Jaco
(506) 8893-4975
info@smartaccountingcr.com
“Accounting is the language of business.” —Warren Buffett